Civics Education Manual

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ftl jf

L - ~ t

ivics Education Manual

for

In Service and Pre Service

e chers

h

Ministry of Education

urriculum evelopment entre

S HOOL

OLLEGE PRESS 1

LIMITE


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Curriculum Development Centre, 1996

No part ofthis book may be reproduced

or transmitted in any form or

by

any

means, electronic or mechanical,

including photocopying, recording or

by any information storage n

retrieval system, without permission

in writing from the Publisher.

First Published 1997

by

School

College Press Z Limited

Box

32116

Lusaka.

S N 9982 23 35 2

rinted nd bound by Formsxpress, Retreat , Cape


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IT BLE CONTENTS

Preface i

cknowledgements ii

cronyms iii

References iv

n t

Page

Introduction

Introduction to Political Science

2

2

Introduction to Economics

3 International Relations and Organisations

Human Rights 99

5 Conflict and Conflict Resolutions 8

6

Population and Environment

5

7

Gender Issues and Development 25

8

Methodology 36


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preface

This manual has been written on the basis of promoting ideals and

values of democracy t deals with civic educational experiences which

promote national regional and international understanding tackles

contemporary issues such as human rights social justice interdependence

tolerance peace and conflict and sustainable development The concept of

citizenship and the values of the Zambian constitution have widely been

covered This book has been written

n

simple language I trust that

t s

reasonably comprehensive to enable the user to utilize

t

s a guide

n

the

teaching f Civics also examines the teaching of positive attitudes and

values as well as social study skills through which civic awareness can be

realised

n

society It

s

through effective teaching of Civics that

democratic governance can be achieved

Sichalwe M Kasanda

Permanent Secretary

MINISTRY OF EDUCATION


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[ACkOWledgements

he Ministry

Education is especially grateful to United States Agency

for International Development USAID) through the Democratic

Governance Project/Southern University for the financial assistance

rendered during the writing

this manual. The Ministry

Education

would also like to thank the following

Ms Chi umba Nalwamba

Senior Curriculum Specialist, Coordinator

Demographer), Curriculum Development Centre,Lusaka.

Mr Mukelabai Songiso Senior Inspector Schools Civics), Ministry

Education, Lusaka.

Ms Lilian Ntalasha Principal Curriculum Specialist, Consultant, Civic

Education Association, Curriculum Development Centre.

Ms

innie

Chi ala

Programme Officer, Researcher and

Demographer, Education Support Integrated Programme ESIP), Lusaka.

Mr Hakasenke Senior Inspector Schools Continuing Education),

Ministry

Education, Lusaka.

Mr Geoffrey Simfukwe

Senior Lecturer Civics), Nkrumah Teacher s

Training College, Kabwe.

E.F Chingo,

Director,

CURRICULUM DEVELOPMENT CENTRE,

MINISTRY OF EDUCATION.


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[ cronyms

JvlMI Movement for Multi Party Democracy.

UNIP United National Independence Party.

NEC National Executive Committee.

FODEP Foundation for Democratic Process.

WLG Womens Lobby Group.

ZCEA Zambia Civic Education Association.

NGO

No n Governmental Organisation.

NGOCC Non Governmental Organisation Co ordinating Committee.

SADC Southern Mrican Development Community.

COMESA Common Market for Eastern and Southern African

Countries.

ECOWAS Economic Organisation for West African States.

UAPTA Unit ofAccount of Preferential Trade Area.

PLC Public Limited Company.

ZPA

Zambia Privatisation Agency.

OAU Organisation ofAfrican Unity.

WCED World Commission on Environment and Development.

WID Women in Development.

WAD Women and Development.

GAD Gender and Development.

VIS Village Industry Service.

ZARD Zambia Association for Research and Development.

NORAD Norwegian Agency for Development.

SIDA Swedish International Development Assistance.

ODA Overseas Development Agency.

EEC Europian Economic Community.

nCA Japan International Development Agency.

IMP International Monetary Fund.


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[R F R N S

1

Ball Alan. 1994 . Modern Politics andGovernment. Macmillan

Press, London.

2

Boserup Ester. 1976 .

Environment, Population

and

Technology

in Primitive Societies,

Population and Development Review, 2

NO

pp 21-36.

3

Ghali- Boutros Boutros. 1992 . An gendafor Peace Report

to Security Council Meeting

of

31st January, Department

of

Public information, United Nations, New York.

4 Gibbons S .R and Morican

P

1970 . The League ofNations and

United Nations Organisation

Modem Times Services, Longman,

London.

5 Hunt E.

F

Colander,

D C

1987 . Social Science, n

Introduction to the study

of

Society, Macmillan Publishing

Company, New York.

6

Kabira

W

M

and Muthoni W. 1994 .

h oad o

Empowerment. FEMNET, Nairobi.

7

Kabira

W Met al

1994 . Delusions: Essays and Social

Construction ofGender,

FEMNET.

8

Ministry

of

Education. 1993 .

A Report ofProceedings on

Gender Sensitization and Training Workshop for Personnelfrom

Ministry

of

Education(SHAPE

Secretariat , NewFairmount

Hotel, 10-16th October, Livingstone.

11

Ministry ofForeign Affairs. 1996 . Zambia s Foreign Policy.

Lusaka.

iv


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2 Munachonga L M 1995 .

Gender TrainingManual,

Ministry of

Education in Conjunction with Zambia Education Rehabilitation

Programme, Lusaka.

3 National Correspondence College. 1992 .

Ciwcs Lecture Notes

Lesson 2 21 and 22. Luanshya.

4 NnoH

Okwudiba. 1986 Introduction to Politics. Longman

Group Limited, London.

5

NzouankenJacquesM. 1991 . The African Attitudes to

Democracy , in Introduction to Social Science Journal, Basil

B1ackwall Ltd for UNESCO, Paris.

6

Papp Daniel S. l988 . Contemporary International Relations

Framework for Understanding, 2nd Edition, Macmillan, London

6

Pious R

M

1986 . American Politics nd ;owrnment,

McGraw-

ill

Inc. New York.

7

World Commission on Environment and Development. 1987 .

Our Common Future,

h

Brudtland Report,

Oxford University

Press, New York.

8

Zambia Canada GHRDP Field Office. 1992 odulefor the

Training of Trainers in Gender Sensitisation Techniques,

Lusaka.

v


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[Introduction

This manual for pre service nd in service trainee teachers has

been produced s a result o the National Civics Symposium which took

place at Mulungushi Conference Centre in Lusaka from 1st to 2nd

November 1995. The Symposium recommended that up to date

information in Civics be provided to trainee teachers.

This manual provides the resource material to supplement the

information covered in Civics at college level This is

n

introductory

manual which should form the basis for further study

o

the subject

covered. The following topics have been covered in the manual;

Introduction to Political Science; Introduction to Economics;

International Relations and Organisations; Human Rights; Conflict and

Conflict Resolutions; Population and Environment; and Gender and

Development.

is

hoped that after reading this manual student teachers

will be able to fully discuss the issues covered and also teach the pupils.

In teaching these topics teachers are expected to use methods that

will enhance achievement o Civics o Basic Education Syllabus. These

methods have been outlined in the last section o th manual.


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. L . n . t r . O . d . U . C . t l . o . n _ 1 l . O . ~ . O . I . i t . i c . a . l . s . c . i e . n . c e

J

ntroduction

Political Science s one the major components Civics. This is

because one the main aims teaching Civics

s

to make the learner be

aware

the nature, purposes and functions political institutions. In

every part the world people are governed and they take part

the

running government in one way or another. Governments have leaders

who make laws to ensure order, peace and harmony. The type

government and the manner

which it

s

run affects the welfare the

people. Some the most important obligations

a modern citizen are

therefore, to know how a government operates and to monitor the

decisions and actions the government so that it responds to the

changing needs the people.

Objectives

By the end

this unit you should be able to:-

discuss the major political science concepts such as state, government,

power, authority, democracy.

distinguish a democracy from a dictatorship.

describe the functions and the main structures government.

identify and discuss citizenship qualities that are compatible with

democracy.

discuss the roles political parties, elections and pressure groups

promoting democracy.

identify some study ahd social skills that promote citizen participation.

2


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whose features were different from the Multi-Party System of the Third

Republic.

ov rnm nt

The most important institution

in

a political system

is

the government.

is

the institution through which a nation

is

ruled.

consists of the formal

institutions and offices involved

in

making decisions for a political system.

t is the framework in which the Executive Legislative Judicial and

Administrative functions are carried out. This framework

is

usually

defined

in

a constitution.

In every society some form

of

organised government

is

found because

of

the need for an institution capable of exercising overall social control.

The following are therefore recognised

s

the primary functions of a

government in every society:-

Maintaining internal order n external security

The basic function of government

is

to protect its citizens against

internal and external enemies. The maintenance of law and order

is

usually achieved by using the:-

a . police to arrest those who break the

l w

b . judiciary to pass judgement and determine

punishment.

c . army to deal with external threats and to control internal

disturbances

ifth

police f il

Regulating the activities

of

Society

The maintenance of law and order as well

s

the interactions and

conflicts within the society require the government to make regulations

governing the activities of ll members of the society. In this way the

population is made aware ofwhat is acceptable behaviour in a place

4


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work the use public facilities the organisation economic

social rpolitical enterprises r interpersonal relations and transactions

Promoting the general welfare

One other important function

a government

n

a society

s

the

distribution goods and services to the people

n

the form social

amenities and welfare services The government uses tax and other

revenue policies to allocate resources to various sections the

society It may subsidise education and health services other beneficial

social security systems compensate the injured at a place

work and

offer adequate facilities for old age and child care and the aged

4

Promoting economic development

The promotion economic development involves the government

n

making decisions on how resources will be used for the production

goods and services The government also decides whether to

participate directly

r

indirectly n the production process Direct

participation usually means the establishment

public economic

enterprises

r

acquiring shares n private enterprises Indirectly the

government

s

involved

n

production

y

laying down the rules and

regulations that guide the operations private enterprise By

manipulating tax laws prices and wages the government can affect

the type and quantity goods produced and how when and where

they are produced

5

Safeguarding

um n

Rights

This is one the functions that have increasingly become very

important for modern governments Governments are now judged by

their citizens and other states on their human rights record Democratic

governments have come to accept the protection individual freedoms

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and rights as one their primary functions. The constitution Zambia

has a Bill Rights that protects the rights Zambian citizens.

Political power

n

authority

In order to perform the stated functions a government needs political

power and authority. Political power is very important

n

the resolution

conflicts n society. The distribution power within a political system

determines how conflict

w ll

be resolved and how the resolution

w ll

be

effectively observed by

ll the parties.

Power

s the ability to govern and

maintain order within a society. This

s

achieved by the threat

some

sanctions. These sanctions may be

n

the form

punishment or rewards.

Opposition to the government may result

n

imprisonment or even death.

is the fear these measures that makes citizens obey their government.

However obedience secured solely by the fear punishment s unstable.

Political power s usually accompanied by authority.

Authority

s the

established right t o determine policies to pronounce judgement on

relevant issues to settle disputes and to act s a leader or guide to people.

In short it is the right t command and be obeyed.

There are three types authority namely:-

Traditional authority: this s the right to rule which comes from the

continuous exercise

power through inheritance e.g. chiefs.

Charismatic authority: this results from the exceptional personal

qualities

the political leader e.g. Hitler Nkrumah and Mandela.

Legal bureacratic or Legal rational authority: this authority comes

from the constitution and the office that a person holds. For example the

Zambian Republican President

s

respected not because his r her

personality but because his or her office. The authority comes from the

acceptance

constitutional rules.


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The problem

p w r

a state

Political power is not distributed evenly

in

any political system. The rich

possess more political resources than the poor. They can finance election

campaigns, bribe supporters and opponents and purchase other political

advantages such as good education. The rich may be individuals or

business organisations. Some individuals may have advantages over other

citizens because

of

their leadership qualities.

There is a general agreement that political decisions are made by a few

people in ll political systems. The common description of power as being

vested in ll citizens does not conform to political reality. However, this

description is very important for the legitimacy of the government and the

stability

of

a political system.

f power is always in the hands of a few, then the most important

questions

to

ask about that political system are :-

ow

are the leaders chosen?

What controls are exercised over them by the citizens?

ow

can the leaders be replaced?

What are the mechanisms for replacement?

To what extent is the leadership responsive to the demands of the

citizens?

The answers

to

these questions are used to

cl ssif

political systems into

either dictatorships or democracies.

ictatorships

n

democratic states

Governments are usually classified into two main categories: Democracy

and Dictatorship.

7


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Dictatorship

This

is

a government

in

which a single person or small

group

people have unlimited power. Examples dictatorships are:

one party states military regimes chiefdoms and monarchies. A

dictatorship can take the form either an authoritarian r a totalitarian

government.

nauthoritarian

government is led by a dictator r a small

group that forbids

all

opposition to its rule. Authoritarian government is

based on brute force rather than on the consent the governed. It arrests

tortures and kills political opponents.

A totalitarian government wants to control all aspects a person s life

is

based on force and ideology such as Communism Nazism or Socialism.

Driven by its beliefs creating a perfect society the government does not

hesitate to violate human rights

in

order to achieve its ideals.

ll

religious

social economic cultural and political groups are subordinated to

the government. The individual bows to the will the government as

determined by the single ruling party in

all

matters.

Totalitarian governments seek to control and regulate individuals mind

spirit and body. The media schools and teachers are

all

carefully

supervised. Public meetings are observed for any sign opposition.

Books that express views which the government does not like are banned

and the authors are sent to prison .

In a dictatorship a government exists independently the will the

citizens. Its right t rule does not depend on majority support

the

people.

demo r ti st te

The word and concept

democracy comes from the Greeks.

Demos

means people and

Kratos

means rule - thus democracy means rule the

people. Democracies are governments that are based on a popular vote

and elections which decide who will be in power.

8


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However elections are also held at regular intervals even in dictatorships.

What distinguishes a dictatorship from a democracy are the following

democratic principles:

The existence o several political parties representing different

ideologies thereby recognising a lawful opposition and guaranteeing its

existence.

Freedom

o

the press and information which assumes that there

is

no

government censorship. Backing

is not required

in

order to launch

new press organs and that there is no monopoly on the sources o funds

available to the press that would give one individual or one financial

group a dominant position in this

fiel This freedom also presupposes

that the tax and criminal laws do not hamper the development

o

a

press that is independent o the regime in power.

The independence o th judiciary which should not be subjected to any

pressure by the executive and the members who should not fear for

their careers or for their lives as a result o the judgements that they

pass.

The organisation

o

free elections at regular and reasonable intervals.

There should be elections by secret ballot the results

o

which are

unknown prior to the counting

o

the votes. These elections should

place not only different political parties but also individual candidates

who are independent o the political parties in competition with one

another. When such elections are held both nationally and locally the

participation o the population in the decision making process which

is

a basic feature o democracy is guaranteed. These conditions also

ensure the legitimacy o the government. A legitimate government is

one that

is

periodically elected by universal suffrage and by the majority

o the population

o

the country.

9


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The alternation

power, which means that a government that has lost

n

election held

in

accordance with the rules must agree to resign and

leave for the new majority, i.e the latter given n opportunity to

govern.

These

five

principles must

ll

be present for a state to be considered

s

having democratic foundations.

he

pow r

structure

o

a democratic state

The power structure

a democratic state must be based on the principle

separation powers. Modern governments generally tend to be

organised

in

terms

the broad functions which

ll

governments usually

perform. These are the Executive, Legislature

nd

Judicial functions.

Therefore, these are the three component organs

the government: the

Executive, Legislature and Judiciary. The executive organ

the

government has the responsibility

implementing the decisions arrived at

by the Legislature. The Judiciary has the task interpreting the laws and

ensuring that society obeys the laws. The Judiciary also settles disputes

between the arms

government, Non-governmental Organisations

NGOs and individual institutions.

The principle

separation

powers requires that the Legislature must

not be a tool

the Executive. The Legislature must have the power to

remove the Executive which

in

turn must have the power to dissolve

Parliament. The Judiciary must be separate from the Legislature and the

Executive. The judges must be given guarantees concerning their material

circumstances and their careers in order for them to be

fully

independent

when carrying out their duties.

There should also be separation between the state and political parties.

There

is

a tendency for public services such s the state media, the police

and the

ivil

service to be used for the benefit

the party

in

power.

Ministers who also discharge political duties on the party

in

power are


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strongly tempted to use the state s resources to promote their political

activities. These deny the other political parties access to the same

resources.

emocratic Value

A democratic state will decline rapidly is not sustained y democratic

values. Values are beliefs that guide the behaviour o people. Democracy

requires that participants n the political process share common standards

o behaviour.

These are some

o

the values that sustain democracy:-

respect for human rights.

tolerance and respect for the beliefs and opinions o others.

settling

o

disputes through persuasion negotiation and compromise

within the framework o the law.

Obligations citizens

Democracy places certain obligations on citizens. These obligations are

to:-

vote wisely

n

local and national elections.

become actively involved

n

the nation s political system by joining a

political party seeking political office and by encouraging others to

do likewise.

G

respect the symbols o national identity such as the flag.

demonstrate willingness to finance government services through

payment o taxes.

help defend t he country.

By fulfilling all or some o these obligations a citizen becomes an active

participant

n

the country s decision making process. Citizens

n

a


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democratic society have a responsibility to ensure that the system

succeeds. The citizen therefore has a duty to combat the threats to

democracy such as:

Corruption.

Tribalism and nepotism.

Gender inequality.

Apathy.

Suppression of human rights.

Rigging

of

elections.

Lack of respect for the rule

ofl w

he constitution

This is the fundamental law that a society uses to organise its government

define and limit its power by describing its relationship with the citizens. A

constitution is the foundation stone for democracy because it performs the

following functions:

promoting the rule ofl w

limiting the

power of

the government.

distributing power among the organs

of

government that is the

separation

of

powers.

protecting the human rights

of

citizens.

A constitution can either be written or unwritten flexible or rigid. A

written constitution

s

in the form

of

a book.

n

unwritten constitution is

based on conventions traditions and customs

of

the society. A

fl xi l

constitution can be amended by a majority in the Legislature while a rigid

constitution requires a referendum before an amendment can be effected.

12


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The

Zambian constitution

The structure

of

the Zambian government is outlined

in

the Republican

constitution. The constitution has the following sections:-

preamble.

bill

of

rights.

qualifications for Zambian citizenship.

powers

of

the Executive Legislature and Judiciary.

olitic l rties

A political party is a voluntary association whose members share common

beliefs and wish to form the government of the country. Political parties

make democracy

work

by carrying

out

the following functions:-

nominating candidates for elective positions

in

the national and local

government elections.

putting forward political economic and social issues by deciding where

the party stands on a particular question

of

public interest. This

declaration

of

principles is called the party platform

or

manifesto.

conducting election campaigns

in

order

to

gain public office so that the

party s manifesto can be implemented.

acting as a wat chdog ov er t he party

in

power. Opposition parties must

be alert

to actions taken by the ruling party which may not be favourable

to the interests of the people.

rty structure

n

org nis tion

A party needs a nation wide structure and organisation in ord er

to

win

elections. The following are structures of party organisation in Zambia:-

the

National ommittee

It organises the party at the national level. It

is made up

of

senior members of the party such as the President


22/147

Chairperson and Secretary-General.

parties like the Movement for

Multiparty Democracy MMD) and theNational Party, the National

Committee is called National Executive Committee while in United

National Independence Party UNIP)

it

is called the Central

Committee.

there are also provincial, district, constituency, section and branch

committees t organise the parties at these levels.

r ssur

r ups

A pressure group is a voluntary association people who share certain

aims and w ho wish

t

influence the decisions

the government. Pressure

groups act as communication links between the government and the

citizens who wish t influence the decisions government leaders.

order

t

achieve this objective, pressure g rou ps us e t he following

methods:-

holding discussions with t p political leaders and civil servants. This is

called lobbying.

carrying out press campaigns.

holding demonstrations.

staging s trikes and boycotts. .

promoting civil disobedience e.g. blocking roads and rioting.

Pressure g rou ps are also called interest groups

r

non-governmental

organisations NGOs).

Examples pressure groups in Zambia are the:-

Foundation for Democratic Process FODEP).

Women s Lob by Group.

Tra de Unions.

Zambia Civic Education Association.

Church.


23/147


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tudy kills

the bility

t

loc te nd g ther inform tion from number

sources

e g books nd newsp pers

t king notes

listening reflectively

t

or l present tions

interviewing resource persons

observing nd describing occurrences in the school nd community

oci l kills

writing nd presenting speech

p rticip ting in discussion involving soci l problems

pl ying different roles in group such s being ch irperson r secret ry

using procedure meetings effectively

suggesting nd using methods

me suring group progress


25/147

- .L.nlllltT.o.d.U.C.t.io.n_to_E.c.o.n.o.m. .c.s

ntroduction

or

any country to develop its economy it must be well organised.

Economics is a key factor in national development. Economics is a vital

subject for national development. is therefore important to seriously

examine some

o

the economic issues affecting a country. This unit will

discuss the following concepts:

Development.

Economic development.

Demand and supply.

Financial institutions.

Private and public enterprises.

Trade.

Budget.

Economic groupings.

bjectives

By the end o this unit you should be able to:

discuss the subject matter o Economics and its relationship with other

disciplines.

explain the relationship between demand and price supply and price.

define development and underdevelopment.


26/147

discuss factors

production types

industries economic policies and

the role

agriculture

n

development.

compare and contrast private with public enterprises.

discuss the meaning types and origin

money inflation and deflation

and the role

financial institutions.

discuss the meaning and types

foreign aid its importance the role

donor agencies the effects

foreign aid to developing countries and

the debt crisis.

discuss the National Budget taxation and donor support.

define local and international trade balance trade balance

payments terms

trade and government policies on trade.

he subject m tter

economics

Economics has been defined n different ways. However

ll

the

definitions agree that it is concerned with the production distribution and

consumption wealth.

Economics s about the satisfaction peoples wants. It s concerned with

people and the social systems by which they organise their activities to

satisfy their basic material needs such as food shelter and clothing and

also non- material wants such as education leisure and spiritual fulfilment.

It

s

peoples wants rather than their needs which provide the motive for

economic activity. The production

wealth

s

necessary because it

enables individual s wants to be satisfied. It

s

the use

resources or their

allocation and organisation that constitutes the subject Economics.

Human existence has been preoccupied with the production and

consumption

wealth the desire for which seems to arise from peoples

basic impulse to increase on their welfare. The concepts wealth and

welfare therefore form the basis Economics. A nation s wealth

consists

its stock goods and services. Welfare on the other hand

refers to the satisfaction that an individual rsociety derives from wealth.

18


27/147

he rel tionship with other disciplines

Economics is a social science Unlike the physical sciences

in

the social

science

economics tht:re are only tendencies which are subject to great

variations

in

different countries and activities and at different times

However economics has to be studied

in

a scientific manner Problems

are considered analysed simplified and perhaps subjected to

mathematical treatment as they are solved Mathematical figures are used

for illustrations Like Geography Economics deals with various issues

pertaining to human development For example it examines the effects

large population on the developing economies allocation and

development

industries distribution wealth

and

many others


28/147

[ v lopm nt

Development embraces the major economic and social objectives that

societies strive for. is the process

of

improving the quality

of

life for

ll

These include:

the provision of basic needs such as food clothing clean water

housing and health facilities.

the increase

of

peoples freedom to choose by providing a variety

of

consumer goods and services.

the utilisation

of

available resources effectively.

the eradication

of

poverty.

n er evelopment

underdeveloped country is one which has good potential for using

more capital

or

more labour or more available natural resources to

support its present population but fails to do

so

The following are

indicators ofunderdevelopment:

low per capita income.

poverty leading to malnutrition and high mortality.

high unemployment.

high levels

of

illiteracy.

unsafe drinking water.

inadequate industrial and social infrastructure.

low quality

of

labour force.

over population.

low foreign currency earnings.

mono economy.


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Indicators

evelopment

The following are the indicators development:-

- adequate family income for providing the basic necessities, such as

food, shelter and clothing.

- availability

jobs to all family heads.

-increased productivity in the economy.

- high standard living- including nutrition, housing, health and

education.

- high national income rGross National Product GNP .

national independence.


30/147

conomic evelopment

Economic development entails the increase in the amount goods and

services produced

in

a country. Demands for higher standards

living

have put great pressures on governments to achieve faster rates

economic growth. Economists have identified several factors which

determine the rate growth.

actors ofproduction

ny activity which helps to satisfy material wants is called production.

Enterprising individuals organise production by employing what are called

factors production land, labour and capital .

e nd

Land includes all kinds natural resources such as agricultural areas,

natural grasslands, woodlands, deserts, oceans, seas and lakes, rivers,

the atmosphere and everything

in

them.

abour

This

is

human effort, physical and mental, directed to the production

goods and services. must be understood that it is the services

labour which are bought and sold and not labour itself

Productive orces

These are means production such as factories, machines and people

with production experience, labour skills and knowledge science and

technology .

abour productivityn work culture


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Production

is

not only affected by the size of labour force and the number

of hours worked, but also by the quality and effective utilisation of the

working population. Improving the efficiency of labour is a matter of

concern to

all

countries.

is

the productivity of labour which is the

critical factor.

Productivity

refers to the output per worker per unit

of

time. The unit of measurement

is

per man-hour. The following are the

factors influencing labour productivity:-

ducation

and

training.

A well trained labour force with sound technical training is more

effective than one which lacks training.

Working conditions.

The efficiency

of

labour is very much influenced by the conditions

under which it is carried out.Great attention should be paid to things

such as ventilation, lighting, temperature and many others

in

places of

employment.

Welfare services.

Firms should provide welfare services for their employees such as

playing fields, social and recreational facilities, medical facilities and

transport. Such provisions contribute towards a happier, healthier and

more efficient

~ o u r

force.

he co-operating factors.

The quality of the factors land and capital with labour

is

an important

determinant oflabour productivity. Organisation ofworkers and

motivation are also important. The positioning of the working tools, the

layout o the machinery, the movement o materials are ll important


32/147

for improvements

in

productivity.

Moti vation.

This

is

a very important determinant o productivity. A high degree o

joint satisfaction is necessary for improved productivity. The payment

o

bonus schemes where monetary reward

is

more closely related to

effort, are widely used as means o stimulating productivity. Profit

sharing schemes can also encourage workers to work hard. Also

workers should be involved in decision making process. workers pass

decisions involving reaching certain targets

in

production, they will

work harder.

abour Market

This is where people who are ready to work sell their labour. There are

those who are trained to do specific jobs, referred to as

skilled

workers

and those who are not trained at ll known as

unskilled

workers.

Another category o workers

in

the labour market

is

that o highly trained

people with years o specialised training. These are called professionals.

They require intensive training to master the skills

o

their professions.

Semi skilled

workers receive training for a short time only e.g. drivers.

abour aws

There are a number o laws protecting both an employee and an employer.

These laws are contained

in

the Industrial Relations Act o 1972 refer to

Civics Grade 9 Teacher s Book).

abour Movement


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A labour movement is an organisation o trade unions. Trade Unions are

organisations formed by workers for the purpose o collectively

bargaining with employers. Objectives o trade unions are to:-

Improve members working conditions in terms o working time

holidays welfare facilities and negotiating for higher wages and salaries

for members and so forth.

Encourage members to take an active role

in

national development.

Provide workers education especially on workers rights.

n

agreement is not reached between a trade union and the employer an

arbitrator

is

called. He

or

she

is

an independent official who comes

in

to

solve a dispute between the trade union officials and the employers.

In Zambia the

Industrial Relations ourt

makes a

in l

decision on labour

disputes. When wor kers go on strike without the support o their trade

union it

is

an illegal or an official or

wild cat strike

A strike becomes

legal when a union declares a dispute with the employer

apital

Capital

is

any product o labour and land which

is

used to produce goods

and services. It includes ll equipment used in production e.g. factory

buildings motor vehicles roads darns money and so on. The capital used

in

the direct production

o

commodities may be subdivided into

fix

and

working

capital. In the textile factory the machinery installed

in

the

factory forms the fixed

or

sunk capital. While the various inputs which are

fed into the machinery

in

the process o production are the variable

capital. Whether production is carried out

or

not expenses must be

incurred on fixed capital while expenses on variable capital only occur

25

when production takes place.

irculating capital

is the working capital


34/147

which directly enters into the production o the commodity. For example

cotton is circulating capital when it directly goes into the manufacture o

cotton cloth.

apital accumulation

formation

This is important for the sustainability and development o the economy.

The fonowing factors affect its formation or accumulation:

. ow incomes leaving little or nothing to save.

. Consumption habits; people eat expensive food foreign drinks buy

expensive cars radios television sets and so on.

The extended family system. By maintaining large families it is difficult

to save any money.

No future plans. People spend more to fulfil their present needs and end

up being extravagant.

Social status. This tends to depend on consumption in housing e.g.

dress cars etc. This acts as a disincentive to capital accumulation.

ntrepreneurship

A person responsible for an enterprise

in

a business is called an

entrepreneur entrepreneur is responsible not only for arranging how a

piece o work shall be carried out but also for organising the work o

others. He or she has to make important decisions to determine what to

produce how much to produce and the production methods to be used.

conomic Policies

Economic policies are guidelines or an outline o measures government

intends to take

in

order to achieve specific goals. Economic analysis

is

concerned with the means o achieving particular economic objectives.

The choice o the objectives how people want economic resources to be

used in ord er t satisfY their wants is a matter political decision. The

main aims government s economic policy are:


35/147

a high and stable level employment.

price stability.

a satisfactory balance payments position.

an a cc ept anc e r at e economic growth.

an equitable distribution income and wealth.

27


36/147

em nd nd

Supply

em nd is

the amount

of

any commodity or service which a person or the

community is prepared to buy at a given price.

All

goods are scarce as far

as the demand for them

is

concerned. There

is no

sufficient amount for

anything to allow everyone to have as much

of

it as she or he would like.

Supply is

the quantity of a commodity

or

service that is offered for sale at

any given price. You must clearly distinguish between

demand

and

desire or need

or

want

What people desire

or

need or want is

of

no

direct concern

to

the economist. He or she

is

interested only

in

how much

people are prepared to buy at a given price. Unlike demand supply in

economics always means supply at a price.

t is

meaningless to talk

of

large supply

of

something without quoting the price at which the

commodity is being supplied.

The laws

of

emand n upply

Professor Sir Hubert Henderson stated three laws

of

demand and supply

in

his book entitled

Supply

nd

Demand

These are:-

Law

:

When at the price ruling demand exceeds supply the price tends

to rise. When supply exceeds demand the price tends to fall

Law 2:

A rise in price tends sooner or later to contract demand and to

extend supply. Therefore a

fall in

price tends

t

extend demand

and reduce supply.

Law

3:

Price tends to level at which demand is equal to supply.

According

to

Professor Henderson these three laws are the cornerstone

of

economic theory because

all

economic analysis rests on them.

28

he relationship between pricend demand


37/147

A change in the price of an item will result in a change in

the

demand for

it. rise in price will

tend

to lower demand. This is because:

fprice

rises fewer people can afford

to

buy

the

commodity

or

they

may not buy as much as they would like to so that the demand will

tend to

fall.

f

the

item becomes cheaper more people can afford to buy it and

these

people who

previously managed

to

buy a little

of

it may buy

more so

that the

demand is likely

to

rise.

em nd

schedules

nd

demand curves

demand

curve

can be obtained by showing

the

effects.Qf changes in the

price of an item demanded for example:

Price in Kwacha Per Kg

KlO

K20

K30

K40

K50

K60

mount

demanded in Kg

lOKg

8Kg

7Kg

4Kg

3Kg

lKg

A demand

curve

can

be

obtained by plotting this schedule on a graph.

The amounts

demanded at var ious prices are joined by dots with a smooth

curve

as

shown

in

the graph

:

29

Demand Curve

r ph

10 ~ . .


38/147

9

8

7

6

.5

:

5

l 4

a

3

2

I- - ountI

60

0

0

0

o- - .

. I

1

Price in Kwacha

In this diagram the line DD is the Demand Curve.

indicates the various

quantities which will be demanded at different prices. At a price ofK3

the amount demanded will be 7Kg. If the price were to rise toK50 the

amount demanded would fall to 3 Kg. While if the price were to fall to

KIO the demand would rise to

IOKg.

Notice that these changes are

in

accordance with the relationship between price and demand as shown in

the graph.

The relationship between price n supply

ffects

of

Price

n Supply is the amount oftered for sale at a fixed

price. Different quantities will be supplied at different prices. Therefore

a change in t he price

of

an article will bring about a change

in

the supply

of

it. This means a:-

rise in price will cause a rise in supply;

fall in price will cause a

fall

in supply.

30

Supply

schedules and supply

u r v e s ~

You can show the relationship

be twe en price and supply by a table of prices and the different quantities


39/147

supplied at each of these prices as follows:

Price

in

kwacha per Kg

Amount

Supplied in

Kg

KIO

K20

K30

K40

K60

2Kg

4Kg

7Kg

8Kg

9Kg

If

you plot the above schedule as a graph you obtain a Supply Curve

Graph

upply Curve

60_.__ 7 9

I o Prlcej

9

Quantities Supplied in Kg

4

5

o l . . . . . . . . . . . . ~

/ 2

40

30

u

20

The line SS

in

the diagram is the supply curve. t shows the various

quantities which will be supplied at different prices. If the price is K20

t he supply will be 4Kg; but

if

the price rises to K30 the amount supplied

will rise

to

7Kg. A rise

in

prices will cause a rise

in

supply.

The elasticity

of

demand


40/147

Elasticity o demand shows the degree o responsiveness o demand to a

small change in price. a small change

in

price causes a large change in

demand then demand is said to be elastic. However

i

a small change in

prices causes small change

in

the amount demanded then demand

is

said

to be inelastic.

easurement

of

elasticity o fem n

There are two methods o measurements:-

The total expenditure metho

This method measures variations in total expenditure

by

the public on a

commodity. This shows how the total expenditure on an item

will

be

affected by changes

in

its price and whether the demand for the item

is

elastic or inelastic. This

is

in relation to:

a

Falling Prices

there is a small fall in price and demand

is

extended a little so that

the total expenditure on the commodity

is

unchanged the elasticity

o demand is said to be Unity For example 24 items are sold at K10

per item.

the price is reduced toK8 per item and the demand goes

up

to 30 items then the total expenditure on the commodity

is

unchanged at K240. The elasticity

o

demand

is

therefore

unity

or

equilibrium

b . there

is

a small fall

in

price leads to extension o demand so that

the total expenditure on the commodity is greater than before the

demand is said to be elastic. In the example above the

fall

in price

from K0 to K8 per item will cause the demand to rise to 40 items

32

then the total expenditure will rise from K240 to K320, that is 40 items at

K8 each. This means that demand is elastic.


41/147

c . If there is a small fall in price leading

to

a very small extension of

demand, so that the total expenditure on the commodity has now

fallen,

the

demand is inelastic.

he percent ge method

This method considers comparative changes in price and demand. y

this method elasticity of demand

is

measured arithmetically as follows:-

Elasticity ofDemand is Unity if:-

i .

The Percentage

r ise in

the

demand

The percentage

fall in

price

or

ii . The Percentage fall in the

demand

The

percentage rise

in

price.

If

the value of the fraction

is

greater than 1 the demand is elastic;

if

it is

less than the demand is inelastic.

or Example, if in the first case the percentage rise

in

demand had been 8

percent and the percentage fall

in

demand had been only 4 percent then

the elasticity of demand would have been 8 divided by 4 = 2, this is

greater than 1 Unity . The demand would therefore have been elastic.

33

ctors which determine el sticity

dem nd


42/147

There are several factors which help to determine whether the demand for

a commodity is elastic or inelastic. Here are some ofthem:-

The

existence

of

substitutes:

The demand for goods which have close and effective substitutes

is

likely

t o be very elastic while

if

no adequate substitutes can be found the

demand will be inelastic. orexample the demand for salt and sugar are

extremely inelastic because there are no substitutes. The demand for one

brand

of

beer is likely to be extremely elastic since an increase

in

one

brand of beer is likely

to

cause a large number

of

drinkers to buy another

brand.

Proportion of

total expenditure

The proportion of a person s total expenditure which is spent on the

commodity will affect elasticity of demand. Any item which requires a

large proportion

of

an individual s total expenditure is likely to be elastic

in demand. For example an increase

in

the price

of

a dinning table set

from K8 OOO to

K2 OOO

will probably cause a very substantial

fall

in

demand.

Luxuries or necessities:

The demand for luxury good s is generally elastic while the demand for

necessities

is

usually inelastic. Necessities have to be purchased whatever

happens t o their price. Thus t he demand for salt is inelastic not only

because it

is

a necessity but also because it has no adequate substitute.

34

Personal Habits:

Our personal habits often decide which commodities have elastic demand


43/147

and which do not. Some people have turned goods which are really

luxuries into necessities. For example tobacco and alcohol are luxuries

and may not be necessities to some so the demand for these goods tends

to be inelastic. Increases the price usually have very little effect on the

quantities o these goods.

he mportance elasticity demand

Elasticity

o

demand s not merely a theoretical concept but it s also o

great practical use. For example:-

a . A shopkeeper who s not satisfied with the sales

o

his or her product

may consider changing the price

o

the commodity order to increase

the profits. Before he or she changes the price consideration

o

the

elasticity o demand for the product should be given. the demand

for the commodity is inelastic then any rise prices will be profitable.

b . Elasticity

o

Demand

s

also

o

great importance to the government.

the Minister o Finance wants to raise extra revenue from taxes on

goods he

or

she will impose taxes on goods for which the demand is

inelastic such as tobacco alcohol sugar and petrol. Since the demand

is inelastic the public will continue to buy as much as before even

when the price s increased by the amount o the tax. This will make

the government get more revenue.

35

Financial Institutions


44/147

Financial institutions are very necessary in any given economy. There are

organisations that deal with money. There are different types of financial

institutions such as Commercial Banks Credit Unions Building Societies

and Insurance Companies. Without financial institutions most business

activities would

at standstill.

oney

Money is a medium of exchange. It should be fairly durable capable

of

being divided into reasonably small units and easy

to

carry about.

should also

relatively scarce that

is

using special metal like silver as

money

or

special print paper which is difficult for counter feiters

to

copy.

unctions oney

a used as a means

of

exchange.

b acts as a measure

of

value. expresses value

of

ll other commodities.

c as a means of accumulation

or

loading. You save money in the bank for

future use.

d as a means

of

payment for something

or

services done.

e as an international means

of

purchase for example the US dollar and

the British pound.One single currency is used

in

relation to other

currencies in international trade and at the world market. This

is

known as convertible currency.

Any currency which is legally accepted by a government becomes a legal

tender. A legal tender is any means

of

payment that a debtor can legally

compel his creditor

to

accept.

36

Types Inflation

i Creeping or chronic inflation

This involves a steady but moderate


45/147

annual rise

in

the general price level

o

goods and services at

n

annual

rate between 1 and 6 percent.

ii

Hyper or galloping iriflation

This occurs when the price level

o

goods and services rise at a very rapid rate. Money loses function or its

value as a medium o exchange. People are unwilling to receive it and

prefer to barter their goods. When things have become very bad like

this, the only possible course o action is to withdraw the currency and

issue new monetary units. A good example

is

when Zaire's currency

Zaire was pegged at 2.5 million to a 1 US in 1993. Zaire withdrew

the currency and replaced

with a new one.

iii)

Suppressed Inflation

This is a situation where demand exceeds

supply, but the effect on prices is minimised by the use o measures

such as price controls and rationing. However, price controls do not

deal with the causes

o

inflation, they merely attempt to suppress the

symptoms. The excess demand continues to exist and tends to show

itself

in

the form o waiting lists and queues.

Causes

Inflation

Causes

o

inflation are usually classified as demand as a pull factor and

cost as a push factor.

i

Pressure

demand

When too much money is chasing too few goods

and services, there is bound to be

n

increase

in

supply. This type

o

inflation is called

buyers

inflation

or

demand inflation. It is a situation

where aggregate demand persistently exceeds aggregate supply at

current price so that prices are being pulled upwards. This type

o

inflation is mostly associated with conditions o full employment. A

situation

o

excess demand may arise when a country

is

trying to

achieve an export surplus,

in

order

to

p yo some external debts.

37

Exports are inflationary because they generate income at home but

reduce home supplies demand in the home market unless taxes and

savings are increased.


46/147

ii When costs ofproduction rise This s referred to as seller or cost

push inflation. It

s

due to:-

Labour costs workers demanding and receiving more pay than what

they produce. The cost materials such as a sharp rise n the price

crude oil.

Greater profits especially monopoly profits.

Tax increases; higher indirect taxes and import duties.

iii Increase in money supply A rapid and large increase

n

the money

supply will encourage an existing inflation and further stimulate total

demand.

iv Expansion of the non market sector ofgovernment services financed

from taxation High taxation required to pay for the services tends t

reduce the savings and profits.

he ffect

inflation

Inflation is undesirable because it produces serious economic and social

problems such as :-

the effects on income People receiving fixed incomes are badly

affected. Inflation reduces their real income because the value

their

money

s

reduced. Wages salaries pensions and rents are affected.

On the other hand inflation favours business people shareholders and

others whose incomes are not fixed n money terms. Business profits are

likely t rise during inflation.

ii the effects on production n employment Entrepreneurs invest more

during an inflationary period. More investment means more jobs for

38

people. Thus, output and employment levels are likely to rise during

inflation.


47/147

iii

the effects on the p ttern s vings

During inflation, money

is

not a

good store

value.The real value

assets such as savings deposits

and life insurance policies, begin to

fall

People prefer to invest

in

property and art objects whose value rises during inflation.

iv

the effects on borrowers nd lenders

Borrowers gain at the expense

lenders, by the time a borrower repays his or her loan its value will

have been reduced.

v

the effects onforeign tr de

By raising prices

home-produced goods

relative to the prices

goods produced abroad, inflation encourages

imports. Similarly, exports are discouraged. With imports rising and

exports declining, a country

is

likely to end up with severe difficulties

with the balance

payments.

eflation

This

is

a continuous

fall in

the general price level

goods and services.

It

is

a deliberate contraction money supply

in

an attempt to reduce

prices. Deflation

is

usually caused

by

a

fall

or reduction

total demand

for goods and services. When this happens producers are forced to sell

their goods at lower prices.

ile

effects

deflation

These are the opposite

those ofinflation:-

i Groups with fixed incomes gain at the expense groups whose

incomes are not fixed. This

is

because when prices

fall

the real value

purchasing power their money increases. Business costs do not

fall

39

as fast as the fall in prices leading to lower profits or even losses; as a

result the incomes o businessmen and shareholders will fall


48/147

ii As business profits decline the levels o investment and employment go

down thereby reducing total production.

iii The real value o debts and savings is increased lenders gain at the

expense o borrowers since the purchasing power

o

rapid money is

higher than that o the original money lent out.

iv y lowering the prices

o

home-produced goods relative to the prices

o goods produced abroad deflation tends to encourage exports and

discourage imports.

olutions to deflation

Government tries to increase total spending by lowering:-

i

the bank rates making it cheaper for business people and consumers to

borrow money and hence increase demand. Purchasing power can be

increased by reducing taxes.

ii government may increase its own expenditure to increase demand.

may increase the salaries and wages

o

public employees and encourage

firms to do the same for their workers.

eflation

This is a deliberate expansion o the money supply undertaken to stimulate

an economy that is under employed.

40

The Roles

of

financial institutions

nks


49/147

A b ank is an institution t ha t is prepared t o accept deposits money and

repay cash on demand.

Functions

of

banks are to:

i

accept cash deposits

nd

safe guard them This

is

done on savings

accounts, fixed deposits and current accounts.

ii act as agents

for

payment A cheque is the principal method

payment in businesS.

provides a safe means for the transmission

money from one business to another

r

from one customer to another.

iii issue bank notes Bank notes are issued

in

fixed denominations. On

its face t he b an ke r promises t o pay the bearer on demand t he sum

stated. A bank note is thus an acknowledgement. This

is

done

in

Zambia by the Bank

Zambia

in

conjunction with other commercial

banks.

iv lend some money

customers A bank can lend a c usto mer cash as

long as the customer promises to pay back with interest. This is

possible especially for those with established businesses

r

big savings.

This

is

done in the following ways:-

By means

of

a loan account The borrower s current account will be

credited by the amount

the loan. Thus, the borrower draws cash from

his

r

her current account.

By means

of

an overdraft The customer

is

permitted

t

draw cash

more than the amount banked but pays interest on the amount

overdrawn.

4

y acting s agents for their customers. Banks transact foreign

exchange business and obtain foreign currencies. They issue bank

drafts travellers cheques provide night safe facilities cash dispensers


50/147

and so on.

ypes

anks in Zambia

There are different banks

n

Zambia; the main ones are:-

Commercial Banks.

These offer various services mentioned above.

Some

these are: BarclaysBank Zambia National Commercial Bank

Standard Chartered Bank Indo -Zambia Bank Finance Bank Citi

Bank Capitol Bank and Union Bank. ll these banks are controlled

by a central bank the Bank

Zambia.

Building Societies. The main one s the Zambia National Building

Society whose main function is to provide loans to people who want to

build houses. also provides savings facilities like a commercial bank.

Zambia National Provident Fund ZNPF . This was established

n

1965

t

offer pension schemes and savings for employees not covered by

government pension schemes. Part an employee s wage

s

deducted

and deposited into the Fund. The employer also contributes the same

amount towards the employee s pension scheme. Benefits from ZNPF

are given when an employee retires after the age 45.

Other Financial Institutions are:-

Credit Unions.

These are co-operative banks providing loan facilities

t

their members.

42


51/147

u get


52/147

A budget is an estimate or plan future income and expenditure A

family might draw up a budget

in

accordance with the expected income

Similarly every government draws up a budget each year

In

Zambia for

instance the government presents an annual budget proposal to

parliament The purposes a budget are to:

carry out the development plans by providing money for public

expenditure cutting down on wastage and making the best use

the

money available

supply community services

redistribute income and wealth by making services like health education

and many others affordable t the people

There are three types budget These are:

Personal udget

This shows how an individual wants to spend his or

her money and the source his or her income

Family udget

This is the expenditure the family

The National udget

This shows how a country proposes to spend the

money on development at any given period especially per year and

how the government intends to collect revenue to finance projects and

services

The National udget

The government through the Ministry Finance gives a statement

r

a

plan which forecasts its income and expenditure for the year

is

simply

an instrument for achieving economic control o the economy during the

year. Powers to collect taxes have to be renewed annually as a protection

to

the common people. The main task o the Ministry o Finance

s to

assess the economic situation the country.

may bring a budget which


53/147

will have an accelerating, neutral

or

restraining effect

accordance with

the Government s estimates o what s required.

A National Budget is made up o revenue and expenditure. consists o

the following parts:-

Recurrent revenue

This s money that government receives every year

from different sources. The main source

s

taxation.

2 Recurrent expenditure This is money spent by government every

year.

or

example on salaries, maintenance, etc.

3 apital expenditure This is money spent on new projects such as road

construction, building o schools and so on

A good budget is one which shows surplus or balance

income=expenditure, income>expenditure).

u geting

r a deficit

When the Ministry o Finance budgets for a deficit, it plans to spend more

t he year than the amount expected to be collected from taxes. This is

necessary when the economy needs stimulation so that the aggregate

monetary demand can be raised. Some o the signs which require

budgeting for a deficit are high unemployment, loss o confidence by the

entrepreneurs on profitability

o

their businesses and the collapse

o

industries.

By budgeting for a deficit, such as reducing taxation, the Ministry o

Finance leaves th e average citizen with more money to spend. the

45

citizens spend more money the economy will be revived. Another way

doing this is for the government to increase welfare benefits to the needy

people and to go ahead with capital projects. This will stimulate the

economy and recovery will start.


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udgeting fo r a surplus

Inflationary pressure in the economy will make the Ministry Finance

take measures to arrest the situation. For example it can raise taxes to

reduce spending. This will leave the budget with a surplus. The reduction

money supply in the economy will reduce the demands for goods and

services. This will prevent prices rising and ease the inflationary pressure

in the economy. Whether the economic policy is successful or not

depends on the reaction

the tax payers. The extra taxation may

encourage wage demands that may fuel inflation. The people may give up

extra work due to heavy tax burden. This will result in the drop

productivity. This

is

also inflation.

neutr l budget

The Ministry

Finance wi l bring in a neutral budget when the economy

is

believed to be right with neither a stimulus nor restraint required. This

means any tax charged will cancel out another. For example n increase

in the tax fuel and a reduction in duty tax will make little difference.

This will leave the demand for fuel unchanged.

Taxation

Tax is a sum money paid to the government in accordance with

theTaxation Act. Taxation is the act taxing or money raised from taxes.

Tax is paid according to income property owned goods bought etc.

Taxes are two main types direct and indirect


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o or support

The government cannot raise the required revenue to meet its budget It

therefore asks for donors to support funding

some projects especially


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capital projects Donors give grants and loans to Zambia Refer to the

section on Foreign id International financial institutions also give loans

to Zambia However the loans unlike the grants have to be paid back

with interests This creates a debt burden to Zambia

49

rivate and ublic nterprises

A public enterprise is owned by the state while a private enterprise is


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owned by an individual or a group individuals. The m in differences

between them are those

ownership and motive. Businesses

in

a public

sector are owned by the state and belong to the community as a whole.

There

is

no clearly identified owner.

is

mostly the consideration

public interest that determines the operation a public enterprise and not

profit

r

surplus. In a

private enterprise

the pursuit

profit or surplus is

the determining factor

in

the operation

the enterprise.

has an obvious

owner r group

owners. Decisions are taken

by

the owners capital

or their elected representatives within the

firm

while

in

a public enterprise

decision making procedure is highly centralised and

in

the hands

the

political representatives the people. The following are types firms

in

the private sector:

he sole trader

This

is

a single owner a business enterprise. Control

is

vested

in

one

person who enjoys

ll

the fruits success and hence has a great incentive

t

run the business efficiently. There

is

personal capital and labour

assisted perhaps by one or two employees. This type

enterprise

is

mostly confined to the retail trade. Personal supervision ensures effective

operation at all times. There are no formal procedures to be followed.

artnership

In this enterprise a sole trader takes a partner into the business thus

sharing responsibility and ownership.

is

a very convenient method

getting more capital for the expansion business. The number

partners

is

limited to 20.

is

also a suitable method acquiring

expertise. People specialise

in

different aspects the business such as

taxation and transport. The tasks responsibility and organisation

the

50

business are shared. he action of one partner is binding on others.

Therefore, it is very important for partners to have absolute confidence in

each other. A

person

who joins a partnership, supplies capital and shares

the

profits,

but does not take

part in the management, is known as a

dormant or

sleeping partner.This business organisation is

common

in


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professions such as law, accountancy, surveying and medicine.

The

jo nt

stock company

This consists of an association of people who contribute towards a joint

stock

of capital for

the purpose of

carrying out business with a v iew of

making huge profits. There are two kinds of jo int stock company, the

private and public company. In most cases public companies are much

larger units than private. A private company must include the word

Limited in its name, while a public company must have

the words

Public Limited Company at

the

end of its name, abbreviated as

PL

he

distinctive feature of

the

joint

stock

company is that a large number

of people provide the capital in varying amounts and receive shares in the

profi ts. In this

way

it is possible to raise large sums provided the

owners

of the company are able to persuade the public about the prospects of the

company.

Importantfeatures

o

the Joint Stock ompany

the

company

itself

is completely liable for its debts, but the liability of

the

shareholders is limited to the amount they have agreed

to

subscribe

to

the capital of the company. After paying for the shares in full, the

shareholders cannot be asked to meet any debts the company may incur.

A business organisation which undertakes large-scale operations is

called a Limited Company. heprinciple attraction

of

this business unit

is

that

shareholder s liability is limited to the nominal value of the shares

held n this way many people can buy shares in ;m enterprise without

risking their entire personal possessions.

51


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In contrasting the joint stock company and the public enterprises the

followingfeatures should

noted

Control he joint stock company is controlled by a board of directors

elected by the shareholders while the public corporation is controlled by


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a board appointed by the government

Ownership

A joint stock company is owned by the shareholders

whereas the public corporation is owned by the state

Finance A joint stock company raises its own capital by the issue of

shares

to

the general public but the public corporation obtains most

of

the capital directly from the government

Motives

A joint stock company exists primarily for making profits

while the public corporation operates in

the public interest and simply

makes little profit

to

cover the costs

Advantages a public enterprise

Provide necessary social facilities like education sanitation and health

Being unprofitable ventures they are not likely to be provided by

private enterprise cheaply

Provide services which are a natural monopoly like railways electricity

and water supply

Capital can be provided by taxation as well as by borrowing with

government guarantees about interest and repayments This is useful

where profits are unlikely for sometime such as the ZCCM

The provision of services without a major emphasis on profit making

r n ~ r s

the

goo s or

services cheaper than in private sector This

amounts to a social subsidy

There are large scale operations e g electricity supply by ZESCO

isadvantages

public enterprise

Prices charged for goods and services are not economical. Therefore,

large losses are incurred.

Politicians may interfere with the operations the enterprise. This w


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result in loss making or total collapse.

Waste

s

sometimes not discouraged, since losses are borne by the

taxpayers r ratepayers.

The government s likely to discourage private investment by protecting

state enterprises. This may lead to shortage goods n the country due

to lack variety. Therefore, there s

no

freedom choice.

Goods produced are

low quality due to lack competition.

ationalisation

Nationalisation s the taking over

private companies by the

government. This is done through a complete take over after

compensation s paid to the owners the company

r

through buying

over 50 percent the shares n the private company.

Nationalisation allows the interests

the community to prevail. The

government may try to influence the general economic activity by way

nationalisation. For example, it may want to create more jobs by

encouraging expansion

industries.

A private industry producing a major source government revenue may

be nationalised. For example, the Zambia Consolidated Copper

Mines ZCCM which was nationalized

n

1968 s the major foreign

exchange earner for Zambia. The arguments for nationalisation are that:-

Basic industries should be operated n the national interest and not with

a view to private profit.

54

Only public ownership can ensure that a powerful monopoly position

will not be used t exploit consumers.

Only the state can provide a very large injection capital which is

needed to restructure and modernize capital - intensive industries.

A large sector

the economy directly under government control can be


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used as a powerful tool to control the economy. This

will

stimulate

n

increase

in

income and employment.

Nationalised industries, charged with operating in the public or national

interest, will be under strong political and social pressures to give much

more attention t public service than private ones. They may be forced to

operate some loss making activities. For example, the liquidated United

Bus Company

Zambia OOZ provided transport services to rural areas

where roads are very bad. Buses broke down and a lot money was

spent to repair them. Heavy losses were incurred

in

running the company.

The government provided subsidies for such non- profitable operations.

riv tis tion

This is the process selling state owned businesses to the private sector.

This includes the selling

government owned shares

in

state

enterprises.

Arguments for Privatisation are that:-

raises revenue for the government. The revenue makes it possible for

the government to reduce its borrowing and to make tax cuts without

reducing its own spending.

increases competition and efficiency. Competition motivates private

companies to imr ; ve their products and services. Inefficiency leads

t bankruptcy.


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Trade s important to any society. Without it there can be no meaningful

development. Trade is the selling and buying

of

goods and services. There

are two types oftrade

Local or domestic.

External

or International.

Chain distribution

The movement of goods from the producer to the

consumer s called the chain

of

distribution. The production of goods and

services requires well organised methods of distribution. Goods for sale

move from the manufacturer to the wholesaler and then to the retailer and

finally to the consumer.

The Retail Trade

A retailer

s

a business person who sells things

small quantities. He or

she acts as an agent for the manufacturer and the wholesaler who provide

goods. The consumer buys goods from the retailer.

Functions the retailer

The retailer performs the following functions:

providing local supplies By establishing their shops

town and

villages throughout thecountry retailers provide consumers with

goods.

the breaking

bulk While manufacturers and wholesalers deal

very

large quantities retailers provide goods

small units.

57

providing a variety

of

goods A manufacturer may make only one

particular brand. A retailer sells goods from a number

manufacturers and this provides a variety goods for consumers to

choose from.


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advice n information A retailer may be able

t

give information

t

the manufacturers representatives who call on him

r

her on the

requirements certain products. This may affect future production.

providing other services A retailer may provide a delivery service

in

respect some durable goods such s television sets cars etc. It may

not be possible for the customer to collect these from the shop. Some

retailers close their shops very late to allow their customers enough

time

t

do their shopping.

ypes

etailers

Street markets This includes stalls

in

markets. They are mostly owned by

small retailers who have complete control their businesses.

Multi

Documents

Civics Education Manual